Are you looking to sell your house but have recently discovered a tax lien on the property? You may be worried and unsure of what to do next.

Don't worry – this blog post is here to provide you with all the necessary information to answer questions such as whether or not it's possible to successfully market and list your home for sale while dealing with an active tax lien. Keep reading for an in-depth guide on how selling a house with a tax lien works!

What Is a Tax Lien On a Home

A tax lien is a legal debt claim that the government puts on an individual's property to enforce payment of taxes. This could be a state, federal, or local property tax lien. The government can impose these liens when taxes are unpaid and can remain until the debt is paid off.

Liens may also include additional penalties and interest on the actual amount owed. If you fail to pay off your lien, the investor who purchased it has the right to foreclose on your home to repay the debt.

Contacting government entities and private investors to negotiate terms for satisfying the lien is important before it becomes unmanageable.

Why Is My Tax Lien Higher Than The Taxes Owed

You may be subject to penalty fees and interest from the IRS when you owe taxes. This can happen if your tax bill goes unpaid for a certain period. These additional charges are calculated based on a percentage of the amount owed each month or year until the debt is paid in full.

For example, failure-to-pay penalties for income taxes can reach up to 25% of the amount due after two months of nonpayment. The penalty rate increases to one percent if 10 days pass after the IRS has issued a notice of intent to levy property.

In some cases, such as employment taxes, penalties can reach 100% of the original amount due – meaning that what started as a $5,000 debt can quickly become $10,000 due to interest and fees.

Furthermore, these charges continue to compound over time, making the total amount owed much higher than the initial taxes owed.

It is important to address any tax liens as soon as possible to avoid these additional costs and ensure that your equity in the property is not reduced drastically due to growing debt. If selling your house is the only way to clear your lien, start working on it immediately so that penalties and interests do not take away all your profits.

How Is a Tax Lien Discoverable

During a title search, tax liens can be identified in the Georgia Property Records Search and are discoverable. The lien index in the county where the property is located is checked for the parties' names.

Often, tax liens that appear may not be an exact match of the homeowner's name, so further investigation is necessary to ensure accuracy. Additionally, some liens will provide the last four digits of a Social Security Number and can be verified with that information.

It is important for homeowners to honestly let their real estate agent know of any existing tax lien on their property before selling, as they are most capable of helping navigate this situation successfully. Seeking professional help from a qualified tax attorney or advisor can also ensure all legalities are properly handled.

Property owners should take the necessary steps to understand and resolve their tax lien before selling a home, as any issues will be discovered during the title search process. With proper understanding and guidance, it is possible to successfully list and market your house while dealing with an active tax lien.

Taking these steps can relieve some of the burden of selling while dealing with a tax lien, ensuring you are both legally responsible and financially secure.

Options For Selling a House With a Tax Lien

When it comes to selling a house with an active tax lien, there are some primary options you can pursue. These are as follows:

Dispute the tax lien with the IRS (or other government entity)

If you strongly believe the tax lien is wrong or out-of-date, you can dispute it with the IRS (or other government entities). This process may take a while and will require gathering documents to prove your case. You must prove why the lien should be removed before any sale can proceed. Additionally, there may be court fees associated with disputing a tax lien.

However, this option could be an effective way to clear up your name and remove the lien from the property so that it can be sold.

Request a certificate of discharge

One of the first steps to selling a house with an active tax lien is to request a certificate of discharge from the taxing authority. This document is used to prove that you have paid off any outstanding taxes, and it can be requested from your local county or regional office.

Once obtained, it will show potential buyers that the liens have been removed and that you can sell the property without any issues. Make sure you give yourself plenty of time to obtain this document before listing your home for sale – it could make a world of difference in finding a successful buyer!

Satisfy the delinquent tax

One of the most important things to remember when selling a property with an active tax lien is to satisfy the delinquent taxes to release the lien. This can be done by paying the amount due in full or setting up a payment plan with your local municipality.

It's also important to note that any additional fees associated with liens, such as interest and penalties, must be satisfied before closing the sale. Once all payments have been made and proof of satisfaction has been provided, your local government will release the lien, and you can move forward with listing and marketing your home!

Pay off the lien amount at closing

One of the most important steps in selling a home with an active tax lien is to pay off the lien amount at closing.

This must be done before or during the sale of the property and is required by law. It's important to note that paying off this amount doesn't necessarily mean that the lien will be removed from your records – this could take up to 8-10 weeks.

However, you can still market and list your home for sale while paying off the lien amount at closing. Be sure to check with your local county office to find out if there are any other requirements related to tax liens when purchasing or selling real estate.

Wait for the debt to expire

When selling a house with an active tax lien, the best approach may be to wait for the debt to expire. Depending on the type of lien, a statute of limitations usually limits how long creditors have to collect on the debt.

This means that after this period ends, you will no longer owe any money and can proceed with selling your home without issue. However, it's important to note that interest accrues on some types of liens, so you should contact your local taxing authority for more information if needed. With patience and due diligence, selling your home with an active tax lien can become much easier!

FAQs

Can the IRS stop you from selling your house?

No, the IRS cannot stop you from selling your house. However, they can put a lien on it if you owe taxes. This means that when you sell it, the money will first go towards paying off any outstanding taxes before you receive your profits.

Can I still sell my house with an active tax lien?

Yes, selling your house with an active tax lien is possible. You must satisfy any delinquent taxes and pay off the lien amount at closing to proceed with listing and marketing your home for sale.

How do I get a tax lien removed from the IRS?

The best way to get a tax lien removed from the IRS is to dispute it with them or pay off the outstanding taxes in full.

Conclusion

Selling a house with an active tax lien is possible. However, you must be aware of the options available and consider the resources it may require. It's key to weigh your choices and determine what will work best for your current situation. Utilizing professional help when dealing with a tax lien could save you time and money in the long run.